UpdateBraskem-Quattor deal creates top Americas resins producer

22 January 2010 17:52[Source: ICIS news]

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HOUSTON (ICIS news)--Braskem’s consolidation of the petrochemical arms of Brazil’s Petrobras, Odebrecht and Quattor will make it the largest plastic resins producer in the Americas and is part of a long-term plan to become one of the world’s five largest producers, the Brazilian company said on Friday.

“The acquisition is creating a world-scale player,” chief executive Bernardo Gradin said on a conference call with analysts. “Braskem positions itself as the biggest resin producer in the ?xml:namespace>Americas and the eighth-biggest worldwide, giving us world-scale capacity and making us better positioned to compete in the petrochemical sector.”

The merger of Braskem and rival Quattor will create Brazil’s largest petrochemicals player and its sole polyolefins producer. Moreover, it should lead to the creation of numerous jobs in the petrochemical industry - particularly the plastics sector - and higher investments in research and development (R&D), Braskem said.

Overall, the combined resin capacity of 5.51m tonnes/year would rank first in the Americas, ahead of 5.31m tonnes/year by ExxonMobil and 4.83m tonnes/year from Dow Chemical, Braskem said.

Going forward, Braskem cited “aggressive growth plans” in Mexico and Venezuela that could add further to that capacity as it seeks to become one of the five largest global producers by 2020.

In the transaction, Brazilian holding company Unipar will receive reais (R) 647.3m ($358m) for its stake in Quattor while Braskem will also acquire Unipar Commercial for R 27.7m and pay Unipar R 25m in cash for its 33.3% stake in Polibutenos.

State-controlled oil company Petrobras, and conglomerate Odebrecht said they would consolidate their direct and indirect interests in petrochemicals and create a holding company for Braskem, BRK Investimentos Petroquimicos SA (BRK). They plan to inject capital into BRK and a capital increase for Braskem.

The merger is going ahead after legal objections to the deal were overcome.

Quattor is currently jointly owned by Unipar and Petrobras, and operates 10 plants in the Brazilian states of Sao Paulo, Rio de Janeiro and Bahia. The company was created in 2008 following a restructuring of Brazil’s petrochemicals industry.

The deal, which effectively nationalises Brazil’s petrochemicals industry, is subject to approval from shareholders as well as Brazil's antitrust system. Those hurdles should be cleared, however, with the deal expected to be finalised within the next 120 days, Braskem said.